IT cos may look elsewhere if profits suffer further: NASSCOM

Bangalore, Aug 6 (UNI) NASSCOM President Kiran Karnik today cautioned that that severe pressure on the profitability of IT sector may lead to Multinational and Indian IT companies shift their bases from India.

''Everything is hitting sector. Wage increase Rupee appreciation, zooming real estate costs and other factors has affected the IT industry. If the trend continues, will look outward.

Some have already begun to look'' he told newsmen on the sidelines of NASSCOM India ITeS-BPO Strategy Summit which began here today.

At the same time he said India's values were still very strong and the IT sector would continue to grow. For the next three to five years there would not be a problem in terms of growth but the effect would be seen beyond 2010, he said.

He urged the Union government to help the industry with both immediate and medium-to-long term measures. "As an immediate measure government could remove Minimum Alternate tax and as a long term measure it should concede the industry's demand of extending the STPI deadline by at least another ten years," he said.

"Countries like China and Philippines are offering huge incentives while they are being removed in India. The two countries are offering tax rebates, free facilities, refunding the training costs of the locals and they are even paying one year's salary of all local employees," he explained.

Mr Karnik said the competition was hotting up like never before and the companies, both Indian and Multinationals, were looking for alternative sites especially when they were planning expansion.

"We have to change the whole mood and climate. STPI benefits has to be extended beyond 2009. Big companies will anyway go to SEZ, but SMEs will be the big sufferers. Government should think of ways to help these units. Otherwise the entrepreneur of SMEs will have only two options -- to give up the industry or go to China or any other country like that," he said.

UNI